Top Story Lending Related

The CFPB, in observance of the anniversary of the Equal Credit Opportunity Act (ECOA), has published an article, "What you need to know about the Equal Credit Opportunity Act and how it can help you: Why it was passed and what it is," the first of two articles on ECOA scheduled for the observance.

The FTC has announced that a federal judge has banned from the collection business a group of debt collectors who pretended to be affiliated with the government, and ordered them to pay nearly $11 million, after granting the Federal Trade Commission’s request for summary judgment in a case filed by the agency. The action is part of Operation Collection Protection, a continuing nationwide crackdown on collectors whose illegal tactics include harassing phone calls and false threats of lawsuits and arrest.

Five federal regulatory agencies (FRB, FDIC, NCUA, OCC, and Farm Credit Administration) are requesting comment on a joint notice of proposed rulemaking to implement provisions of the Biggert-Waters Flood Insurance Reform Act (Biggert-Waters Act) that require regulated lending institutions to accept certain private flood insurance policies in addition to policies made available by the Federal Emergency Management Agency (FEMA). The federal flood insurance statutes require regulated lending institutions to ensure that flood insurance is purchased in connection with loans secured by improved real property located in areas having special flood hazards. Under the Biggert-Waters Act, regulated lenders must accept, in satisfaction of this mandatory purchase requirement, policies issued by private insurers that satisfy the criteria specified in the Biggert-Waters Act. The proposed rule, which has been submitted for publication in the Federal Register, includes provisions to assist lending institutions in identifying private flood insurance policies they would be required to accept. The proposal also would clarify that lenders retain their discretion to accept private flood insurance policies that do not meet the criteria for mandatory acceptance, provided certain conditions are met. Furthermore, the proposed rule would establish criteria to apply in determining that coverage offered by a mutual aid society provides the type of policy or coverage that qualifies as "flood insurance" for purposes of the federal flood insurance laws. Comments are due 60 days from the date of publication in the Federal Register.

UPDATE: The proposed rule was published at 81 FR 78063 in the Federal Register, with a comment deadline of January 6, 2017.

In remarks at the FDIC's sixth annual Consumer Research Symposium in Arlington, Virginia, Chairman Gruenberg reviewed the recently released 2015 FDIC National Survey of Unbanked and Underbanked Households (see earlier Top Story). He discussed the main findings, reasons for being unbanked, effects of variable income, financial services use, and continued growth in mobile and online banking. Gruenberg concluded, “We are keenly aware that we have more to learn in this area. For example, if changing economic conditions explain only some of the increased participation in our nation’s banking system, what other factors are playing a role? Conversely, what factors may be constraining participation in the banking system? And, more broadly, are there opportunities for banks to better address the financial services needs of consumers, particularly low- and moderate-income consumers?”

The Federal Reserve Board has released several reports:

• Financial holding companies as of October 26, 2016
• Updated communications equipment price indexes
• August 2016 G.20 finance companies owned and managed receivables outstanding – auto loans: terms of credit
• Credit and liquidity programs and the balance sheet as of October 12, 2016

On Friday, October 28, the FDIC released a list of 14 administrative enforcement actions taken against banks and individuals in September. The list consisted of three consent orders; one combined civil money penalty and removal and prohibition order; five Section 19 orders; one voluntary termination of deposit insurance order; and four terminations of consent orders or cease and desist orders.

The Order of Prohibition from Further Participation and to Pay a $5,000 Civil Money Penalty was imposed on a former institution-affiliated party of a Utah bank who "has engaged or participated in violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2607, and its implementing regulation, Regulation X, 12 C.F.R. Part 1024, and/or has engaged or participated in, unsafe or unsound banking practices, and/or breaches of fiduciary duty as an institution-affiliated party of [the bank] by agreeing to pay fees for the referral of mortgage loan business."

The Order of Termination of Insurance was issued in the Matter of Mid America Bank, Janesville, Wisconsin, which the FDIC determined "is not engaged in the business of receiving deposits, other than trust funds."

The Office of the Comptroller of the Currency has released a new list of enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. There were three Cease and Desist (C&D) Orders, seven Civil Money Penalty (CMP) Orders, one Formal Agreement, four Removal/Prohibition Orders, and two Orders for Restitution, including:

• The $20 million CMP and C&D Orders relating to violations of the Servicemembers Civil Relief Act issued to Wells Fargo Bank, announced earlier
• A $2 million CMP issued to First Niagara Bank, for deceptive disclosures relating to overdraft fees
• A consent order banning a former Minnesota bank director from the industry and assessing a $20,000 CMP
• An order banning a former California banker from the industry, and assessing a CMP of $25,000
• Orders banning two former New Mexico bankers and ordering a total of $17,500 in CMPs
• An Order that a former Texas bank director pay a $5,000 CMP for Regulation O violations

The CFPB has issued warning letters to 44 mortgage lenders and mortgage brokers. The Bureau has information that appears to show the lenders and brokers may be required to collect, record, and report data about their housing-related lending activity, and that they may be in violation of those requirements. The CFPB identified the 44 companies by reviewing available bank and nonbank mortgage data. The warning letters warned that entities that meet certain requirements are required to collect, record, and report mortgage lending data, and suggested that recipients review their practices to ensure they comply with all relevant laws. The companies are encouraged to respond to the Bureau to advise if they have taken, or will take, steps to ensure compliance with the law. They can also tell the Bureau if they think the law does not apply to them. The CFPB, in sending these letters, made no determination that a legal violation did, in fact, occur.

The NCUA Board met on October 27, 2016, and announced that it unanimously approved five items:

• A proposed rule to provide further field-of-membership community charter options for federal credit unions.
• A final rule modernizing existing field-of-membership definitions for federal credit unions to improve consumer access to affordable credit.
• A final rule re-naming NCUA’s consumer office as the Office of Consumer Financial Protection and Access to clarify its function and role in promoting consumer access to affordable financial services.
• A final rule adjusting civil monetary penalties for inflation, as required by Congress.
• An interagency proposed rule to implement the private flood insurance requirements for loans in special flood hazard areas contained in a 2012 statute.

The OCC will host two workshops in Philadelphia at the Sheraton Suites Philadelphia Airport, December 6-7, for directors of national community banks and federal savings associations supervised by the OCC. The Risk Governance workshop on December 6 combines lectures, discussion, and exercises to provide practical information for directors to effectively measure and manage risks. The workshop also focuses on the OCC’s approach to risk-based supervision and major risks in the financial industry. The Compliance Risk workshop on December 7 combines lectures, discussion, and exercises on the critical elements of an effective compliance risk management program. The workshop also focuses on major compliance risks and critical regulations. Topics of discussion include the Bank Secrecy Act, Community Reinvestment Act, and the Truth-in-Lending (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA) Integrated Disclosures Rule, also known as TRID.